Cross Default

What is 'Cross Default'

Cross default is a provision in a bond indenture or loan agreement that puts the borrower in default if the borrower defaults on another obligation.

Also known as "cross acceleration".

BREAKING DOWN 'Cross Default'

This provides more security to the lender. You can think of this as an "out-clause" to the contract.

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RELATED FAQS
  1. What special powers does the government have to collect student loans?

    Contact student loan companies before student loans default, as the government has the power to get its money. Prior to default, ... Read Answer >>
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    Learn how default rates affect businesses in the credit services industry, and what rates are considered normal for a company ... Read Answer >>
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  4. In the beginning of this year, the total par value of all CCC-rated bonds were $12 ...

    The correct answer is: d) (i) Default Loss Rate = [($1.3 billion - $625 million)/$1.3 billion] = 51.9% (ii) Dollar Default ... Read Answer >>
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